Meanwhile, Retail Price Inflation (RPI), which includes mortgage costs and is used as the basis for many wage deals, fell from 4.8% in July to 4.7% in August.

Inflation has remained stubbornly high over recent months and at the Bank of England’s last three interest rate meetings, policymaker Andrew Sentance voted for rates to be lifted from their current historic low of 0.5% – where they have been since March 2009.

The CPI inflation rate is a benchmark for the Bank of England’s Monetary Policy Committee (MPC) but the Bank has already noted that inflation has remained more persistent than it had expected.

Last month, presenting the bank’s Quarterly Inflation Report, Mervyn King, the Bank’s Governor, said inflation will not fall below its target of 2% until the end of 2011.

The recent decision to hike VAT to 20% next year by the coalition Government will undoubtedly keep inflation higher, noted the Bank.